The modern-day world of entrepreneurs is supported by the various scheduled banks and NBFCs with various products of business loan to boost their businesses. But in most of the cases the applicant although are successful entrepreneurs in their respective field of businesses but are not aware of what are the documents required for business loan in 2024 as these documents for business loan are considered to be the most important one for a successful application and disbursement of such loans.
What is a Business Loan?
A business loan is a product which are provided by the scheduled banks and NBFCs for a certain period of time for the development and expansion of the existing business to boost up the turnover and enhance the chance of earning more profit either in form of unsecured business loan or a secured business loan availed against a collateral security which must be inform of an immovable and tangible assets like residential property, commercial property or industrial property based on the credit history of the applicant, financial eligibility of the applicant and the valuation of the collateral security.
In case of unsecured business loan, the valuation of the collateral securities is not considered because no such collateral securities are taken.
So, to make the whole process of business loan a successful one an applicant who can be an individual as a proprietor or a partnership firm or a limited liability partnership firm or a private limited company must be fully aware of the required documents for business loan application.
What should be the Credit Score?
An applicant being a proprietorship firm or a partnership firm or a partnership firm or a limited liability partnership or a private limited company must possess a healthy credit track record of the previous and present loans.
As per present scenario of the banking sector is concerned applicant being an individual must possess a credit score of 750 to apply for an unsecured business loan where as for a secured business loan the credit score should not be below 700 for the same.
What are the Documents Required for Business Loan?
The documents for business loan application must be submitted for a successful business loan application with the scheduled banks and NBFCs as per the list mentioned below, subject to the profile of the applicant company which can be a proprietorship firm or a partnership firm or a limited liability partnership firm or a private limited company:
In case of proprietorship firm documents for business loan application:
- KYC Documents: KYC documents of the proprietor as an applicant and co-applicant in form of pan card, Aadhaar card and voters’ id card. If the voters’ id card is not available then it can be replaced with passport or driving licence.
- Relationship Proof: Relationship proof of the applicant with the co-applicant in form of birth certificate or marriage registration certificate as the case may be to establish the relationship between them and thus considered as one of the primary documents for business loan.
- Ownership Proof: Ownership proof of the residential address or business address in form of latest electricity bill and latest property tax receipt are considered as vital documents for business loan since applicant having addresses which are both rented cannot be provided unsecured business loan by the lender bank or NBFC.
- Business Continuity: Business continuity proof in form of trade licence or certificate of enlistments for the last three years along with Udyam Aadhaar Registration certificate and other updated licences applicable as per the profile of the businesses as documents for business loan.
- Financial Proof: Financial proofs of the direct income of the business are to be submitted in form of last two or three years of ITR acknowledgement copies with profit and loss account, balance sheet and computation along with the audit reports as form 3cb and form 3cd.
- GST: Financial proofs of the indirect taxes like GST registration certificate and GSTR 3B and GSTR 1 to be submitted for the last one year.
- Bank Statements: Bank statements are required for the last one year of all the current accounts. Savings bank account are also considered as business accounts by some NBFCs for proprietorship firms and asked to be submitted as documents for business loan.
- Loan track records: Sanction letters of the on-going loans along with the loan account statements are also required for the calculation of the total obligations. No objection certificates are asked to be submitted for the loans that have got closed with time.
In case of Partnership firm Documents for Business Loan Application:
- Company KYC Documents: Pan card of the partnership firm along with the partnership deed.
- KYC Documents of the Partners: KYC documents of the partners in form of pan card, Aadhaar card and voters’ id card. If the partners are related to each other than valid relationship proof like marriage registration certificate or birth certificate can also be asked for submission.
- Business Vintage Proof: Business vintage proof to be submitted in form of trade licences or certificate of enlistment for the last three years along with the Udyam Aadhaar Registration certificate. Apart from these all-other updated licences are to be submitted which are related to the business as per the requirement of documents for business loan.
- Bank Statements: Banking records are to be submitted in form of all the current accounts of the company for the last one year.
- Financials: Financial proofs of direct income of the business in form of ITR acknowledgement copies for the last two or three years along with the profit and loss account, balance sheet and audit report of the company are to be submitted as documents for business loan for the calculation of financial eligibility.
- Financial Proofs of the Partners: Financial proofs of the partners can also be asked for submission in form of ITR acknowledgement copies with computation for the last two or three financial years as per the requirement of documents for business loan to get it tallied with the accounts of the business.
- Present Loan track records: : Present loan track records in form of sanction letters and loan account statements are required to be submitted to adjudge the present loan obligations and no objection certificates for the loans that got closed.
Ownership Proof: Ownership proof of the business or the residential address are to be provided in form of current electricity bill or the latest property tax receipt are required to be submitted as documents for business loan.
- GST: Documents for business loan in form of GST Registration certificate along with GST returns are to be submitted for the verification of total turnover of the business.
In case of limited liability partnership documents for business loan application must require the following:
- Company KYC: Company PAN Card and laws and by laws of the company.
- Share Holding Pattern: Share holding pattern of all the partners within the company.
- KYC Documents of All the Partners.
- Business Enlistment and Continuity Proof: Business enlistment and continuity proof in form of trade licence or certificate of enlistment.in addition to it the Udyam Aadhaar registration certificate to be provided as well to establish it as an MSME unit.
- KYC Documents of All the Partners: KYC documents of all the partners in form of pan card, Aadhaar card and voters’ id card.
- Bank Statements: Bank statements of all the current accounts and working capital bank accounts in form of cash credit account or over draft account.
- Financials: ITR acknowledgement copies with profit and loss account, balance sheet and audit reports for the last three financial years of the company.
- Personal ITR Acknowledgement copies and Computation of the Partners, if required.
- GST: GST Registration Certificate along with GST returns for the last one year.
- Ownership Proofs: Ownership proofs of the business or residential address of the partners in form of updated property tax receipt and latest electricity bill.
- All Loan Sanction letters within loan account statements and NOC or NDC of the loans closed.
In case of private limited company or limited company the documents for business loan application must contain as per the list mentioned there under:
- Company Pan Card With Memorandum Of Association And Articles Of Association.
- Letter of Incorporation.
- Share Holding Pattern.
- KYC Documents of All the Directors in Form of Pan Card, Aadhaar Card and Voters’ ID Card.
- Udyam Aadhaar Registration of the Company.
Business Enlistment Certificate for The Last Three Years to Establish The Business Continuation Along With All Other Up to Date Licences Applicable For The Business.
ITR Acknowledgement copies with Financials and balance sheet along with audit reports for the last two or three financial years as per the requirement of the lender bank or NBFCS.
GST Registration Certificate along with GST returns for the last one year.
Bank Statements of all the current accounts and cash credit or over Draft account if there is any for the last one year.
Ownership address proof of the Business place or the ownership proof of the residential address of the directors in form of latest property tax receipt.
All loan sanction letters of the ongoing loans and NOC or NDC of the loans closed.
Apart from the above-mentioned documents the following documents for business loan are also required to be attached if that business loan is a secured loan irrespective of the profile of the applicant:
- Documents of the Property or properties which are to be Mortgaged:
(A) Title Deeds and Chain Deeds of the Land on Which the Property Is Situated.
(B) Sanctioned Plan of The Building from the applicable Civic Authority Like Municipal Corporation or Municipality or Panchayat as per The Situation and Location of the Property.
(C) Mutation Certificate from the CIVIC authority and record of rights from BLRO (Block land records Office) as per the situation and Location of the Property.
(D) Updated Property Tax Receipt from the Civic Authorities along with the Completion Certificates as per The Requirement.
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